UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended April 30, 1997
Commission file Number 33-7870-NY
Travel Ports of America, Inc.
(Exact name of registrant as specified in its charter)
New York 16-1128554
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3495 Winton Place, Building C, Rochester, New York 14623
(Address of principal executive offices)
Registrant's telephone number (716) 272-1810
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock (Par Value $.01 per share) NASDAQ
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
THIS REPORT CONSISTS OF 53 PAGES.
THE INDEX TO EXHIBITS APPEARS ON PAGE 38.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes x No
Indicate by check mark if disclosures of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any acknowledgment to this Form 10-K.
[x]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant is $9,196,998.25. Market value is determined by reference
to the closing price of the Registrant's stock on July 3, 1997.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the close of business on July 3, 1997.
Class Number of shares outstanding
Common Stock, Par Value 5,582,765
$.01 Per Share
Documents incorporated by reference and the Part of the Form 10-K
into which they are listed here under.
PART OF FORM 10-K DOCUMENT INCORPORATED
Part III
Items 10, 11, 12 and 13 Registrant's Proxy Statement
Directors and Executive for the Annual Meeting of
Officers of the Registrant, Shareholders to be held on
Executive Compensation, October 28, 1997
Security Ownership of
Certain Beneficial Owners
and Management, and Certain
Relationships and Related
Transactions, respectively.
TRAVEL PORTS OF AMERICA, INC.
TABLE OF CONTENTS
Item Page
PART I 1 Business................................... 4
2 Properties................................. 13
3 Legal Proceedings.......................... 13
4 Submission of matters to a vote of Security
Holders........ 13
PART II 5 Market for the Registrant's Common Equity and Related
Stockholder Matters......................... 14
6 Selected Financial Data..................... 15
7 Management's Discussion and Analysis of Financial
Condition and Results of Operations......... 16
8 Financial Statements and Supplementary Data. 20
9 Disagreements on Accounting and
Financial Disclosure....................... 36
PART III 10 Directors and Executive Officers of the
Registrant.................................. 37
11 Executive Compensation...................... 37
12 Security Ownership of Certain Beneficial
Owners and Management...................... 37
13 Certain Relationships and Related
Transactions.............. 37
PART IV 14 Exhibits, and Financial Statement Schedules. 37
Signatures.................................. 44
PART I
Item 1. Business
Travel Ports of America, Inc. (Company) operates sixteen (16) 24-hour
per day travel plazas and one (1) fuel terminal in New York, New Jersey,
North Carolina, New Hampshire, Indiana, Maryland and Pennsylvania.
The travel plazas sell, both to the trucking industry and to others,
petroleum products (such as diesel fuel, gasoline and lubricants), and
generally include a truck service and repair shop, a tire and parts center,
a truck wash, scales for weighing trucks, parking facilities, motel rooms, a
family-style restaurant, a travel store, shower and laundry facilities, game
rooms, telephone facilities, money transfer facilities, a convenience store
at the gasoline pump area, and billing and accounting services for truck
fleet operators. The Company hopes to continue to attract both the trucking
industry and the general traveling public by maintaining clean, efficient
travel plazas.
The Company's acquisition policy is to acquire, to the extent
feasible, facilities providing most or all of the services that the Company
believes are desirable. Its strategic plan calls for continued growth within
its current or surrounding market area through the acquisition and/or
expansion of additional facilities if and when opportunities occur.
The Company derives certain benefits from being the operator of
multiple travel plazas. The Company has the ability to acquire the products
that it sells on a volume discount basis. Since it buys petroleum products,
food and other merchandise for several facilities, the Company is often able
to acquire such products at discounted prices.
In addition to favorable purchasing, the Company's multi-unit
structure provides marketing opportunities that might not otherwise be
available. In addition to normal drive-in traffic, truck stop operators,
including the Company, often enter into arrangements with the operators of
truck fleets in which the fleet operator sends all of its drivers who use an
applicable route to a certain travel plaza, primarily to take advantage of a
centralized billing and accounting system such as that offered by the Company.
By offering several facilities, on different routes, the Company is in a
better position to attract and retain such arrangements. Also, the Company
maintains a sales force that seeks out and attempts to enter into such
arrangements with fleet operators whose home offices may not be near some of
the Company's facilities.
The products and merchandise purchased and sold by the Company are
not unique and generally can be obtained readily from a variety of sources
at competitive prices. There are many sources of petroleum products, tires
and truck parts, restaurant food, supplies and merchandise for the Company's
travel and convenience stores. The Company currently buys petroleum products
from major oil companies and from Griffith Oil Co., Inc. (Griffith Oil),
which is owned by Sugar Creek Corporation. The principal shareholder and
Chief Executive Officer of the Company owns and operates Sugar Creek
Corporation. The Company buys its restaurant food primarily from a single
unrelated food distributor, and its other products and merchandise from
various suppliers. Except for the Company's fuel purchase agreements,
including the one with Griffith Oil, which expires December 31, 2005, all of
these arrangements can be terminated at will.
The Company has no customer accounting for more than four percent
(4%) of its sales. Therefore, the loss of any single customer would not have
a materially adverse effect on the Company's business.
Company Developments
On April 30, 1994, the Company acquired certain assets of Exit 3
Truck Services, Inc. in Greenland, New Hampshire. The acquisition consisted
of the purchase of inventory and the leasehold interest in the real property
on which the truck stop is located. The Company has since signed a new 20
year lease on the real property with two five year extensions. The Company
has purchase options throughout the term of the lease.
On June 30, 1994, the Company entered into a $2,500,000 term loan
agreement with its primary lender covering the acquisition and certain
improvements to the facility in Greenland, New Hampshire. Principal payments
are $20,833.33 per month plus interest at the fixed rate of 9.65%. The loan
is amortized over ten years with a balloon payment due on June 29, 1999.
On September 29, 1994, the Company entered into an eight year term
loan with its primary lender in the amount of $10,500,000. Proceeds from
this loan were used for payment of a term loan due in 1996 at prime plus
1.25%, payment of $1.5 million due on the line of credit and capital
expenditures. The loan has a fixed rate of 10.12% with interest only for six
months. From April 1, 1995 until the loan matures a monthly payment of
principal and interest in the amount of $166,957.84 is payable with all
remaining principal and interest due September 29, 2002.
The Company, through a private placement, issued $4,650,000 of
Convertible Senior Subordinated Debentures due January 15, 2005, together
with warrants to purchase additional shares of the Company's Common Stock.
The securities were sold under Regulation D of the Securities Act of 1933
(the "Act") and in offshore transactions under Regulation S of the Act. The
debentures carry an annual interest rate of 8.5%, payable quarterly, and are
convertible into the Company's Common Stock at a price equal to $3.00 per
share at the option of the holder at any time. The debentures are callable at
the discretion of the Company after January 15, 1998, at a redemption price
equal to 109% as of January 15, 1998, and gradually decreasing to 100% at
maturity on January 15, 2005. The warrants, which are exercisable at any
time, entitle warrant holders to purchase up to a total of 15,500 shares of
the Company's Common Stock at a price of $3.60 per share. The underwriter
was issued warrants for 77,500 shares of the Company's Common Stock at a
price of $3.60 per share in conjunction with this transaction. As a result
of the stock dividend issued April 29, 1997, the bond conversion price was
adjusted to $2.83 and the warrant price was adjusted to $3.40. The number of
warrants was increased to 98,580.
On June 15, 1995, the Company sold its facility at Fairplay, South
Carolina to an unrelated third party. The transaction was for the net book
value and the Company received a mortgage on the property for a portion of
the purchase price.
On March 1, 1996, the Company took over the operation of the
Baltimore Port Truck Plaza. The Company signed a seven year lease on the
property.
On October 4, 1996, the Company entered into a permanent financing
arrangement for its Harborcreek, Pennsylvania facility (which was opened in
June 1996) with its primary lender in accordance with the Restated and
Amended Credit Agreement dated December 21, 1995 in the amount of $6,000,000.
Interest is fixed at 9.44% for ten years with level principal payments based
upon a 15 year amortization. A balloon payment is due on September 30, 2006.
On November 6, 1996, the Company entered into an agreement with its
secondary lender that (a) refinanced a mortgage loan due 2001 covering two
travel plazas in Pennsylvania, as well as a term loan due in 1997 and
(b) provided an additional $5,000,000 for 1996/97 capital expenditures.
Interest is fixed at 8.63% for five years with level principal payments based
upon a 15 year amortization. A balloon payment is due on April 10, 2002.
On January 31, 1997, the Company entered into an agreement with its
primary lender that (a) increased the line of credit to $3,750,000 until
August 31, 1997 and (b) provides an additional $3,500,000 for a capital line
of credit. The regular line of credit is limited to the lesser of $3,750,000
or the sum of 80% of the Company's accounts receivable under 90 days old,
plus 45% of the Company's inventory. As of April 30, 1997, the Company has
utilized $200,000 of its available line of credit as collateral for various
letters of credit. The capital line of credit calls for interest only at
prime plus 1/4% until July 31, 1998. At that time the line can be repaid or
amortized over 42 months with interest at prime plus 1/2%. No advances have
been made against the capital line of credit.
Information on major sales classifications is included in Item 7,
page 6 of this report.
Capital Expenditures
For the fiscal year ended April 30, 1997, the Company's Capital
Expenditures for property, plant and equipment amounted to $8,723,016.
Products and Services
The Company provides the following products and services at its
travel plazas and mini-travel plazas.
1. Petroleum Products
The principal products sold by the Company at its travel plaza
locations are petroleum derivatives, primarily diesel fuel, gasoline and
lubricants. Each of the Company's travel plazas has diesel pump islands
accessible to all sizes of trucks and tractor-trailers, as well as gasoline
pump islands that are used primarily for automobiles at most locations. In
addition, a wide range of motor oils and other lubricants are available at
all locations.
An agreement between the Company and Griffith Oil, that expires
December 31, 2005 requires the Company to purchase all of its petroleum
products for three of its facilities from Griffith Oil. The purchases for the
three sites for the year were approximately 11% of all petroleum purchases.
In addition, the Company purchased spot market pipeline tenders (bulk
purchases) for its Berwick, Pennsylvania (Beach Haven) terminal, from
Griffith Oil. These pipeline tenders accounted for approximately 9% of the
petroleum products purchased by the Company during the fiscal year ended
April 30, 1997. Management believes that the terms of the purchase agreement
and the spot market purchases were fair and competitive when compared with
the purchasing opportunities for similar products in like quantities from
other vendors.
2. Parts and Service
Services and repairs are provided for trucks only, not for
automobiles. The Company provides services on an as needed basis, in the case
of breakdowns and unforeseen problems, and for regularly scheduled periodic
maintenance for truck fleets and other customers. In addition to providing
services and repairs, the Company also stocks tires and commonly needed parts
at most of its locations. Repair facilities are not available at Belmont,
New York, Greenland, New Hampshire, Baltimore, Maryland or Lake Station,
Indiana. Truck washes, truck scales and paved parking areas large enough to
accommodate a number of over-sized vehicles are also available at some or all
of the Company's facilities.
3. Restaurants
Each facility, with the exception of Mahwah, New Jersey, includes a
24-hour, family style restaurant where customers are served a variety of
"home-cooked" meals. The Company operates most of its restaurants under the
name "Buckhorn Family Restaurant". The Company purchases its food products
in bulk from unaffiliated sources and meals are prepared and cooked in
on-site kitchens.
4. Motels
The Company's motel accommodations at travel plazas, which are
available to truck drivers and the general public, generally contain double
beds, basic furniture, a color television and a full bathroom. Rooms are
available at nightly rates ranging from $25-$49 per night. Public laundry
facilities are also available. Maybrook and Dansville, New York operate under
a franchise from Days Inn. Greencastle and Harborcreek, Pennsylvania operates
under a franchise from the Rodeway Inn, Division of Choice Hotels
International.
5. Shopping
The Company operates both travel stores and convenience stores.
Travel stores carry a wide range of products often purchased by truck drivers
including health and beauty aids, snacks, tobacco products, western style
clothing and footwear, electronic products (CB radios, radar detectors, small
televisions, radios, stereos), gift items and many other items. Convenience
stores, generally located near the gasoline pump islands, and used more by
the general traveling public, offer bread, milk, beverages, snacks, food
items and other products usually found in such stores. The Company has an ATM
machine at all of its locations to provide cash services for its customers.
6. Billing and Accounting
The Company offers its own credit billing service to truck fleet
operators, permitting a driver to charge purchases of products and services.
This service provides the fleet operator with daily records of its drivers'
purchases through direct electronic transmission. The Company's electronic
billing system can accommodate customers who wish to pay on a cash basis to
avoid finance charges or the higher cost of credit billing.
Properties
The Company's principal office is located in approximately 7,567
square feet of leased office space at 3495 Winton Place, Building C,
Rochester, New York 14623. The lease is through December 1999 at an average
annual rent of $60,168 plus common area charges with a three year extension
until December 2002 and a five year extension until December 2007.
The Company attempts to locate its travel plazas at sites with a
high volume of truck and other traffic, as well as easy access for such
highway traffic. Sites are generally located just off interstate highways or
on other major highways. When and where possible, the Company seeks
locations near intersections of such major routes, so that facilities will be
easily accessible from more than one such route.
A description of the travel plazas, mini-travel plazas and other
facilities operated by the Company follows.
Travel Plazas
1. Dansville, New York. This eight acre site is located at
the Dansville interchange of Interstate Route 390, a major north-south
highway in western New York. The site, which is approximately forty miles
south of the New York State Thruway and thirty miles north of US Route 17, is
leased from the Livingston County Industrial Development Agency. The lease
expires in March 2000, at which time the Company has both the right and the
intention to buy all of the land and improvements for $1.00. The travel plaza
contains ten diesel pumps with card readers, four gasoline fueling positions
with pay at the pump capability, a two-bay service area, a truck scale, six
acres of paved parking, showers, a game room, a one hundred thirty-five seat
restaurant, a twenty room motel, a travel store and a small convenience store.
2. Maybrook, New York. This eighteen acre site is located at
the Maybrook interchange of Interstate Route 84, approximately ten miles east
of US Route 17 and eight miles west of the New York State Thruway. It is sub-
leased from a corporation owned by two people, one of whom is the principal
shareholder of the Company, under a lease that expires in March 2004 with
three five year renewal options available. The travel plaza contains eleven
diesel pumps, four gasoline fueling positions, a three-bay service area, a
truck scale, showers, game room, eight acres of paved parking, a one hundred
twenty-nine seat restaurant, a Pizza Hut Express, a thirty-six room motel and
a travel store.
3. Binghamton, New York. The Company owns a ten acre site
located in suburban Binghamton at the intersection of US Route 17 and
Interstate Route 81. The travel plaza contains eight diesel pumps with card
readers, a two-bay service area, a truck scale, six acres of paved parking, a
seventy-three seat restaurant, six motel rooms, showers, a travel store and a
convenience store with two gasoline pumps.
4. Mahwah, New Jersey. This six acre site in northern New
Jersey is located on US Route 17, one interchange south of the New York State
Thruway and approximately ten miles north of Interstate Route 80. It is
leased from an unrelated landlord for a term expiring February 2002. The
travel plaza contains five diesel fueling positions, a one-bay service area,
approximately four and one-half acres of paved parking, truck scales, twelve
motel rooms, a travel store and showers.
5. Fultonville, New York. The Company owns a twenty acre site
at Exit 28 of the New York State Thruway. The travel plaza contains eleven
diesel pumps with card readers, a two-bay service area, a truck scale,
showers, seven acres of paved parking, a one hundred twenty-four seat
restaurant, a fourteen room motel, a travel store and a convenience store
with four gasoline pumps.
6. Candler, North Carolina. The Company owns an eighteen
acre site located at Exit 37 of Interstate Route 40, less than ten miles
west of Interstate Route 26 and Asheville, North Carolina. The travel plaza
contains ten diesel pumps, four gasoline pumps, a two-bay service area, a
truck scale, showers, eight acres of paved parking, a one hundred
twenty-three seat restaurant and a travel store.
7. Bloomsburg, Pennsylvania. The Company owns a sixteen
acre site located at Exit 34 on Interstate Route 80. The travel plaza
contains twelve diesel pumps with card readers, eight gasoline pumps, a
five-bay service area, truck scales, game room, trucker lounge, snack bar,
showers, laundromat, travel store, a one hundred sixty-six seat restaurant, a
Subway and convenience store and lighted paved parking.
8. Greenland, New Hampshire. This seven acre site is
located at Exit 3 on Interstate Route 95. This facility is leased from an
unrelated landlord for a term expiring April 2014. The travel plaza contains
eight diesel pumps with card readers, four gasoline pumps, a truck scale,
showers, game room, travel and convenience store, a one hundred forty seat
restaurant, a Pizza Hut Express and lighted paved parking.
9. Milesburg, Pennsylvania. The Company owns a eleven and
one half acre site located at Exit 23 on Interstate Route 80. The travel
plaza contains eight diesel fueling lanes, eight gasoline pumps, a three-bay
service area, showers, game room, travel store, a ninety-six seat restaurant
and lighted paved parking.
10. Paulsboro, New Jersey. The Company owns a thirty-two acre
site located at the Mt. Royal Exit on Interstate Route 295. The travel plaza
contains twelve diesel pumps with card readers, eight gasoline pumps, a truck
scale, a thirteen room motel, laundromat, showers, a three-bay service area,
game room, travel store, a one hundred twenty-seven seat restaurant and
lighted paved parking.
11. Porter, Indiana. The Company owns a thirty-six and one
half acre site located at 1600 US Highway 20 near Exit 22b on Interstate
Route 94. This travel plaza has a twenty-nine thousand square foot main
building that contains a travel store, a Subway, trucker lounge, showers,
game room, broker's offices and a one hundred ninety-five seat restaurant and
banquet room. Additionally there is a two-bay service area, truck wash,
twelve diesel pumps with card readers, eight gasoline fueling lanes with pay
at the pump capability and approximately nine acres of lighted paved parking.
12. Lake Station, Indiana. This twenty-four acre site is
located on US Highway 51, just north of Interstate Routes 80 and 90. This
facility is leased from an unrelated landlord until January 1999 with two
ten year renewal options available. This travel plaza has a thirty thousand
square foot main building that contains a travel store, convenience store,
barber shop, a Subway, truckers' lounge, game room, laundromat, showers,
brokers' offices and a two hundred and one seat restaurant. There are
seventeen diesel fuel islands with card readers covered by a canopy, truck
wash, truck scales and paved parking for approximately two hundred and fifty
trucks. In addition there are four gasoline pumps with pay at the pump
capability.
13. Greencastle, Pennsylvania. The Company owns a
twenty-seven acre site located at Exit 3 on Interstate Route 81, a few miles
north of the Maryland and Pennsylvania state border. The travel plaza
consists of four buildings, a convenience store with gasoline fuel islands,
a thirty-six room motel, a fuel building with a four-bay service area, truck
scales, trucker's store, snack bar, twelve diesel pumps and a main building
with a travel store, showers, a telephone room, a game room, trucker lounge
and a one hundred forty-five seat restaurant.
14. Baltimore, Maryland. The Company leases a
twenty-one acre travel plaza and (across the street) a two and one fifth acre
gasoline/convenience store at Exit 57 on Interstate 95. The total facility
consists of three buildings. The gasoline and convenience store has 16 pumps
for both gasoline and diesel. The fuel building has a travel and convenience
store and a Subway fast food operation. The main building contains a super
travel store, showers, a telephone room, a game room, a Taco Bell Express, a
sixty room motel and a hundred twenty seat restaurant. There are 16 diesel
pumps with card readers, truck scales and secured parking for 260 trucks.
15. Harborcreek, Pennsylvania. The Company owns a
seventy-two acre site of which twenty-four acres are used for the travel
plaza at Exit 10 on Interstate 90. The travel plaza consists of two
buildings, a thirty-six room motel and a main building. The main building
has a travel and convenience store, a one hundred eighty seat restaurant, a
Pizza Hut Express, showers, a telephone room, a game room, a trucker lounge
and a three bay shop. There are ten diesel pumps with satellites and card
readers, a truck wash and truck scales.. There are four double sided
gasoline pumps with pay at the pump capability. There is paved parking for
one hundred seventy-seven trucks in addition to car and RV spaces.
16. Belmont, New York. The Company owns a nine acre site at
the Belmont interchange on US Route 17, in southwestern New York state. The
mini-travel plaza contains six diesel fueling lanes, four gasoline fueling
positions, a travel store, a convenience store, a fifty-five seat restaurant
and three acres of paved parking.
Other Facilities
1. Berwick, Pennsylvania (Beach Haven) The Company owns a
five acre site that is a pipeline terminal consisting of five above ground
storage tanks with a total capacity of 2,411,585 gallons. It is used to store
diesel fuel and home heating oil. An office building/warehouse is also
located at the site.
Summary of Property Interest
The following table summarizes the Company's interests in real property, as
discussed above:
Date Approx. Leased or Rent Per Lease
Location Opened Acreage Owned Month (1) Expiration
Dansville, NY Mar 80 8 Leased (2) $ 4,000(3) Mar 2000
Maybrook, NY Mar 84 18 Leased (4) $37,500 Mar 2004
Binghamton, NYMar 84 10 Owned N/A N/A
Mahwah, NJ Mar 84 6 Leased $ 8,788 Feb 2002
Fultonville,NYMar 84 20 Owned N/A N/A
Belmont, NY May 86 9 Owned N/A N/A
Candler, NC Dec 86 18 Owned N/A N/A
Bloomsburg,PA Dec 86 13 Owned N/A N/A
Milesburg, PA Dec 86 12 Owned N/A N/A
Paulsboro, NJ Dec 86 32 Owned N/A N/A
Berwick, PA Dec 86 5 Owned N/A N/A
Porter, IN Jan 89 36 Owned N/A N/A
Lake Station,INJan 89 24 Leased (5) $29,583 Jan 1999
Greencastle,PADec 89 27 Owned N/A N/A
Rochester, NY Aug 91 Office Leased $ 5,014 Dec 1999
Greenland, NH Apr 94 7 Leased (6) $18,000 Apr 2014
Baltimore, MD Mar 96 23 Leased (7) $68,542 Feb 2003
Harborcreek,PAJun 96 72 Owned N/A N/A
(1) In addition to the base rent listed in the above table, the Company
is required to pay, under its leases, all property taxes, maintenance
expenses and premiums for liability insurance on the respective properties.
(2) The Company has an option to purchase for $1.00 at the expiration of
the lease term.
(3) Plus interest at 8.5% per annum on the declining principal balance of
the Industrial Development Loan for this facility.
(4) Leased from Maybrook Realty, Inc., a corporation owned by two people,
one of whom is the principal shareholder of the Company. The Company has the
option to renew the lease for three five year periods with monthly payments
of $41,250, $45,375 and $49,913 respectively. The Company has the option to
purchase the facility upon the expiration of the lease or at the end of any
extended term for $3,500,000.
(5) Leased from the previous owner of the Porter, Indiana facility. The
Company has an option to purchase the facility any time after January 1999
for $3,250,000. If the Company does not purchase the facility, it also has
the option to renew the lease for two ten year periods with monthly payments
of $31,050 and $35,707 respectively.
(6) Leased from unrelated third party for 20 years with option to renew
for two five year periods. Purchase options of $2,400,000 from 5/1/99
through 4/30/04, $2,750,000 from 5/1/04 through 4/30/09 and the greater of
fair market value or $3,000,000 from 5/1/09 through 4/30/14.
(7) Leased from unrelated third party for 7 years. There are several
purchase/sale/extension options affecting the property.
Competition
The truck stop business in general and the separate aspects that
make up such business are all highly competitive. There are many chain and
single operator truck stops throughout the Company's marketing area.
In addition to other truck stops, the Company faces competition from
major and independent oil companies and independent service station
operators; national and independent operators of motels and motel chains;
national and independent operators of restaurants, diners and other eating
establishments; and super markets, department stores, other convenience
stores, drug stores and other retail outlets.
Many of the Company's competitors, such as the major oil companies
and national and regional motel, restaurant and retail chains, are larger,
better established and have greater financial and other resources than the
Company. While the Company intends to attempt to offset these advantages by
continuing to offer all of its products and services in one, well chosen,
highly visible and easily accessible location, there can be no assurance that
this marketing strategy will be successful and profitable.
Regulation
The Company's fueling operations are subject to federal, state and
local laws and regulations concerning environmental matters. These laws and
regulations affect the storing, dispensing and discharge of petroleum and
other wastes and affect the Company both in the securing of permits for its
fueling operations and in the ongoing conduct of such operations. Facilities
that engage primarily in dispensing petroleum products have in the last ten
years been the subject of close scrutiny by regulators. Although the Company
believes that it maintains operating procedures satisfactory to comply with
such regulations and scrutiny, maintains environmental insurance on most of
its facilities, and to date has not had any material environmental claim or
expense, there can be no assurance that significant cleanup or compliance
costs may not be incurred by the Company and may affect the Company's
earnings.
In addition, the Company's motel and restaurant operations are
subject to federal, state and local regulations concerning health standards,
sanitation, fire and general overall safety. In addition, truck stops must
comply with the requirements of local governmental bodies concerning zoning,
land use and, as discussed above, environmental factors. Difficulties in
obtaining the required licensing or approvals could result in delays or
cancellations in the opening of proposed new motor plazas.
Employees
As of April 30, 1997, the Company had a total of 1,540 employees,
1,255 full-time and 285 part-time. Of the full-time employees, 36 are
involved in the corporate office and administrative activities, 115 in
travel plaza management, 4 in sales and marketing, 2 in design and
construction management and the balance in general operating duties, where
all of the part-time employees are involved.
The Company has never had a work stoppage and none of its employees
are represented by a labor organization. The Company believes that it
provides working conditions, wages and benefits that are competitive with
other providers of similar products and services, and considers its employee
relations to be excellent.
Item 2. Properties
A description of the Company's facilities is set forth under Item 1
of this Report beginning on page 8 under the caption "Properties" and such
information is hereby incorporated by reference in this Item 2.
Item 3. Legal Proceedings
The Company is not presently a party to any other litigation (i) that
is not covered by insurance or (ii) which singly or in the aggregate would
have a material adverse effect on the Company's financial condition and
results of operations, and management has no knowledge that any other
litigation has been threatened.
Item 4. Submission of matters to a vote of Security Holders.
Not Applicable
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Company's common stock trades on the on the Nasdaq National
Market tier of The Nasdaq Stock Market under the Symbol: TPOA. The range of
reported high and low sale prices of the common stock during each quarter of
the Company's fiscal years ended April 30, 1997, and April 30, 1996, were as
follows:
1997 1996
High Low High Low
1st Quarter 3 5/8 2 2 7/8 2
2nd Quarter 3 1/2 2 9/16 5 3/4 2 11/16
3rd Quarter 3 1/8 2 1/8 3 1/2 2 1/8
4th Quarter 3 1/16 2 1/4 2 7/8 2 1/4
As of April 30, 1997, the approximate number of holders of common
stock of the registrant was 1,800.
Sale prices are as reported by NASDAQ through April 30 of each year.
All such prices represent actual transaction prices versus bid quotations
because of the Company's inclusion on the NASDAQ National Market System.
The Company may not declare dividends without prior consent from its
primary lender. A 6% stock dividend was declared and issued on April 28, 1997.
Item 6. Selected Financial Data
Operations 1997 1996 1995 1994 1993
Net Sales $207,103,805 $165,164,391 $153,267,079 $137,575,675 $137,682,172
Gross Profit $ 46,436,813 $ 39,142,697 $ 38,237,699 $ 34,610,393 $ 32,574,737
Income before cumulative
effect of change in an
accounting
principle $ 1,700,205 $ 1,690,500 $ 1,890,032 $ 1,457,613 $ 782,592
Cumulative effect of change
in an accounting
principle $ 0 $ 0 $ 0 (99,735)$ 0
Net Income $ 1,700,205 $1,690,500 $ 1,890,032 $ 1,357,878 $ 782,592
Earning Per Share
Primary Income Per Share:
Income before cumulative
effect of change in an
accounting
principle$ .30 $ .30 $ .34 $ .26 $ .14
Cumulative effect of change
in an accounting
principle $ .00 $ .00 $ .00 $ (.02)$ .00
Net Income $ .30 $ .30 $ .34 $ .24 $ .14
Weighted Average Number
Shares
Outstanding 5,719,781 5,708,914 5,635,190 5,575,641 5,499,579
Fully Diluted Income Per Share:
Income before cumulative
effect of change in an
accounting
principle $ .26 $ .26 $ .32 $ .26 $ .14
Cumulative effect of change
in an accounting
principle $ .00 $ .00 $ .00 $ (.02)$ .00
Net Income $ .26 $ .26 $ .32 $ .24 $ .14
Weighted Average Number
Shares
Outstanding 7,378,447 7,361,868 6,136,234 5,575,641 5,499,579
Financial Data
Total Assets $ 62,435,994 $55,278,604 $ 51,370,810 $41,847,897 $40,118,711
Long Term
Liabilities $ 32,082,537 $27,828,457 $ 25,726,157 $18,268,139 $18,155,037
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Quarter ended April 30, 1997 compared to quarter ended April 30, 1996
Sales from operations were $55,763,000 for the fourth quarter
of fiscal 1997, up $8,514,000, or 18% from the fourth quarter last year. Net
income was $424,000 ($.07 per share), up $222,000, or 110% from last year's
net income of $202,000 ($.04 per share).
Sales from same units increased $1,139,000 or 2.5%. Sales from the
new travel plazas added $7,376,000 over last year's sales. Overall every
sales category increased, including diesel fuel, the retail selling price of
which was the same as last year.
Gross profits increased $1,663,000, primarily from the two new
locations while same unit gross profit was down slightly. Operating expenses
increased $1,153,000, all from the new locations as same unit operating
expenses were down $177,000 or 2.4%.
General and administrative expense was the same as last year while
interest expense increased due to higher levels of debt. Other income
increased as a result of higher interest income.
Current year ended April 30, 1997 compared to year ended April 30, 1996
The Company had earnings of $2,903,000 before income taxes
and $1,700,000 in net income on net sales of $207,104,000. Net income is
essentially flat on an increase in net sales of $41,939,000 or 25.4%.
Operating profits from restaurant operations increased $483,000 or 22.3%
over last year. On a same unit basis, restaurant operating profits increased
$303,000 or 13.9%. This offset the decline in fuel operations income,
primarily resulting from the absence of a one time gain of $412,000 in
January 1996 when the Company exercised its option to cancel a fixed price
contract for diesel fuel.
Sales increased by $28,870,000 primarily from the new travel plazas
more than offsetting the decrease resulting from the sale of the facility in
Fairplay, South Carolina in June 1995. On a same unit basis sales were up
$13,070,000. Higher retail selling prices of diesel fuel accounted for
approximately $10,650,000 of the overall sales increase.
Retail diesel gallons sold during 1997 were 109 million, an increase
of 15 million gallons or 16% over the prior year. Same unit diesel gallons
increased 1.3 million or 1%. Sales of retail gasoline gallons were 12.1
million for 1997, an increase of 3.0 million gallons or 33% from the prior
year. Same unit gasoline sales increased 0.2 million or 2%.
Gross profits increased $7,294,000 from the prior year. Most of this
increase came from the two new facilities. Non-fuel gross profit increased
$5,587,000 and gasoline gross profit increased $374,000 while diesel gross
profit increased $1,337,000. Retail diesel margins per gallon were flat when
compares to the prior year. Same unit gross profit increased $183,000 over
last year. Last year included a one time gain of $412,000 as noted above.
Listed below is the breakdown of revenue and gross profits by major sales
classification for the fiscal years ended April 30, 1997, and April 30, 1996.
Percent Percent Percent Percent
Sales of 1997 of 1997 of 1996 of 1996
Category Revenue Gross Profit Revenue Gross Profit
Diesel Fuel 65 27 64 29
Gasoline 8 4 7 3
Restaurant 10 33 11 32
Store 8 13 8 13
Shop 5 11 6 12
Motel 1 3 1 3
Other 3 9 3 8
Operating expenses were $6,254,000 or 21% more than the prior year.
Same unit expenses increased $40,000 or about .1%.
General and administrative expenses increased $288,000 or 7% as
compared to the prior year. Wages increased $212,000 as a result of
additional staff and salary increases. Legal and professional fees increased
$102,000 as a result of acquisition and new venture activity. Advertising
decreased $69,000 from changes in marketing programs.
Interest expense increased by $582,000 from the prior year as a
result of the increased levels of debt. Other income decreased from last
year as a result of lower interest income this year and the sale of two
properties last year.
Prior year ended April 30, 1996 compared to year ended April 30, 1995
The Company had earnings of $2,885,000 before income taxes and
$1,691,000 in net income on net sales of $165,164,000. This is a decline in
net income of $200,000 or 10.6% and a increase in net sales of $11,897,000 or
7.8%.
Overall sales increased despite the sale of the facility in Fairplay,
South Carolina in June 1995, primarily as a result of increased sales volume
in existing locations and partially the result of the acquisition in
Baltimore, Maryland on March 1, 1996. On a same unit basis, revenue from
diesel sales were up 9%, restaurant up 4%, retail stores up 10% and truck
repair shops up 3%.
Retail diesel gallons sold during 1996 were 94 million, an increase
of 4 million gallons or 5% over the prior year. Same unit diesel gallons
increased 5.1 million or 6%. Sales of retail gasoline gallons were 9.1
million for 1996, an increase of 0.5 million gallons or 6% from the prior
year. Same unit gasoline sales increased 0.4 million or 4%.
Gross profits increased $905,000 from the prior year. Non-fuel gross
profit increased $799,000 and gasoline gross profit increased $204,000
while diesel gross profit declined $99,000. Retail diesel margins per gallon
declined from the prior year. The gross profit from the increased number of
gallons sold offset most of the per gallon decline. All areas of non-fuel
gross profit increased over last year. During the year the Company exercised
its option to cancel a fixed price contract for diesel fuel. As a result of
this, the Company recorded a gain of $412,000 which is included in cost of
goods sold. The contract was to run until August 2003 and amounted to less
than 3% of the Company's annual usage of diesel fuel.
Listed below is the breakdown of revenue and gross profits by major sales
classification for the fiscal years ended April 30, 1996, and April 30, 1995.
Percent Percent Percent Percent
Sales of 1996 of 1996 of 1995 of 1995
Category Revenue Gross Profit Revenue Gross Profit
Diesel Fuel 64 29 64 30
Gasoline 7 3 7 3
Restaurant 11 32 11 31
Store 8 13 8 12
Shop 6 12 6 12
Motel 1 3 1 3
Other 3 8 3 9
Operating expenses increased by $615,000 or 2% more than the prior
year. Same unit expenses increased $860,000 or about 3%.
General and administrative expenses increased $467,000 or 12% as
compared to the prior year. Wages increased $151,000 as a result of
additional staff and salary increases. Advertising increased $88,000 from
increased marketing programs. Travel and entertainment increased $131,000
due to additional staff and acquisition activity.
Interest expense increased by $230,000 from the prior year as a
result of the increased levels of debt. Other income increased from last
year as a result of the sale of two properties.
Financial Condition, Liquidity and Capital Resources
Generally, the Company's capital resources are derived mainly from
cash provided by operating activities. In fiscal 1997 operating activities
accounted for the generation of cash in the amount of $5,038,000 compared to
$3,208,000 in fiscal 1996 and $3,914,000 in fiscal 1995.
Cash used in investing activities was $7,295,000 in fiscal 1997,
$11,532,000 in fiscal 1996 and $3,316,000 in fiscal 1995. The decline from
1996 is a result of the completion of Harborcreek in June 1996 and the
receipt of $1,368,000 of cash related to the Allentown mortgage that was
paid in full in 1997. The change from 1995 to 1996 was due primarily to the
on-going construction of the new travel plaza in Harborcreek, Pennsylvania
and an increase in capital expenditures for renovation and expansion of
several travel plazas.
Financing activities provided net cash of $3,725,000 in fiscal 1997
and $2,397,000 in fiscal 1996 compared to a net use of cash in the amount of
$5,819,000 in fiscal 1995.
The overall result of the above activity was a net increase of cash
in the amount of $1,468,000 compared to a net decline of cash in the amount
of $5,927,000 in fiscal 1996 and a net increase in cash in the amount of
$6,416,000 in fiscal 1995.
The Company's working capital excluding current portion of long term
debt was $4,462,000 at April 30, 1996 and $2,231,000 at April 30, 1996. The
increase is primarily due to the net proceeds received from the Allentown
note repayment.
On October 4, 1996, the Company entered into a permanent financing
arrangement for its Harborcreek, Pennsylvania facility (which was opened in
June 1996) with its primary lender in accordance with the Restated and
Amended Credit Agreement dated December 21, 1995 in the amount of $6,000,000.
Interest is fixed at 9.44% for ten years with level principal payments based
upon a 15 year amortization. A balloon payment is due on September 30, 2006.
On November 6, 1996, the Company entered into an agreement with its
secondary lender that (a) refinanced a mortgage loan due 2001 covering two
travel plazas in Pennsylvania, as well as a term loan due in 1997 and (b)
provided an additional $5,000,000 for 1996/97 capital expenditures. Interest
is fixed at 8.63% for five years with level principal payments based upon a
15 year amortization. A balloon payment is due on April 10, 2002.
On January 31, 1997, the Company entered into an agreement with its
primary lender that (a) increased the line of credit to $3,750,000 until
August 31, 1997 and (b) provides an additional $3,500,000 for a capital line
of credit. The regular line of credit is limited to the lesser of $3,750,000
or the sum of 80% of the Company's accounts receivable under 90 days old,
plus 45% of the Company's inventory. As of April 30, 1997, the Company has
utilized $200,000 of its available line of credit as collateral for various
letters of credit. The capital line of credit calls for interest only at
prime plus 1/4% until July 31, 1998. At that time the line can be repaid or
amortized over 42 months with interest at prime plus 1/2%. No advances have
been made against the capital line of credit.
The Company now has a significant portion of its borrowings financed
through fixed interest rates.
Certain loan agreements require that the Company maintain specified
minimums with regard to net worth, current maturity coverage and the
incurrence of additional indebtedness. In addition, the Company cannot
declare dividends without the consent of its primary lender. The Company is
in compliance with such requirements and restrictions.
The cash requirements associated with the Company's expansion and
renovation programs will continue to be met through a combination of cash
generated from operations and bank financing.
Authorized, but unissued stock is available for financing needs;
however there are no current plans to use this source.
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements and Supplementary Schedules
Page
The Following information is presented in this report:
Report of Independent Accountants............................ 21
Balance Sheets for the years ended April 30, 1997 and 1996.. 22
Statements of Income for the years ended
April 30, 1997, 1996 and 1995................................ 23
Statements of Cash Flows for the years ended
April 30, 1997, 1996 and 1995................................ 24
Notes to Financial Statements................................. 25
All other schedules are omitted because they are not applicable or because
the required information is included in the financial statements or notes
thereto.
Report of Independent Accountants
To the Board of Directors
and Shareholders of
Travel Ports of America, Inc.
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Travel
Ports of America, Inc. at April 30, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period
ended April 30, 1997, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed above.
Rochester, New York
June 20, 1997
TRAVEL PORTS OF AMERICA, INC.
Balance Sheets
April 30,
1997 1996
Assets
Current assets:
Cash and cash equivalents, including interest-bearing accounts of
$2,727,500 and $1,292,100 in 1997 and 1996,
respectively $ 3,134,871 $ 1,667,062
Accounts receivable, less allowance for doubtful accounts
of $156,000 and $208,000 in 1997 and 1996,
respectively 4,357,665 4,357,246
Notes receivable 20,725 56,915
Inventories 5,763,023 5,333,829
Prepaid and other current assets 1,231,509 922,029
Income taxes receivable 491,941 130,597
Deferred taxes - current 791,100 371,800
Total current
assets 15,790,834 12,839,478
Notes receivable due after one year,
less allowance of $65,000 in 1997 738,997 2,071,671
Property, plant and equipment, net 41,686,254 35,976,800
Cost in excess of underlying net
asset value of acquired companies 1,904,306 1,968,496
Other assets 2,315,603 2,422,159
$ 62,435,994 $ 55,278,604
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt and
capital lease obligation $ 3,207,254 $ 2,756,102
Accounts payable 5,350,448 5,994,740
Accounts payable - affiliate 1,179,927 747,939
Accrued compensation 1,714,677 1,460,862
Accrued sales and fuel tax 1,925,570 1,247,586
Accrued expenses and other
current liabilities 1,158,607 1,156,856
Total current
liabilities 14,536,483 13,364,085
Long-term debt and capital lease
obligation 25,526,937 22,284,257
Convertible senior subordinated
debentures 4,650,000 4,650,000
Deferred income taxes 1,905,600 894,200
Total liabilities 46,619,020 41,192,542
Shareholders' Equity:
Common stock, $.01 par value
Authorized - 10,000,000 shares
Issued and outstanding - 5,574,965 shares in 1997 (including
315,541 shares issued on April 28, 1997 as a stock dividend,
Note 11) and 5,239,124 shares in 1996 55,749 52,391
Additional paid-in capital 4,649,414 3,813,429
Retained earnings 11,111,811 10,220,242
Total shareholders'
equity 15,816,974 14,086,062
$ 62,435,994 $ 55,278,604
The accompanying notes are an integral part of these financial statements.
TRAVEL PORTS OF AMERICA, INC.
Statements of Income
Year ended April 30,
1997 1996 1995
Net sales and operating revenues (including
consumer excise taxes of $45,062,000 in 1997,
$36,258,000 in 1996,
and $35,356,000 in 1995) $ 207,103,805 $ 165,164,391 $ 153,267,079
Cost of goods sold 160,666,992 126,021,694 115,029,380
Gross profit 46,436,813 39,142,697 38,237,699
Operating expenses 36,255,639 30,001,684 29,386,240
General and administrative expenses 4,560,796 4,273,191 3,805,780
Interest expense 3,103,045 2,520,728 2,290,904
Other income, net (385,872) (537,406) (265,857)
Total expenses 43,533,608 36,258,197 35,217,067
Income before income taxes 2,903,205 2,884,500 3,020,632
Provision for income taxes 1,203,000 1,194,000 1,130,600
Net income $ 1,700,205 $ 1,690,500 $ 1,890,032
Earnings per share - primary $.30 $.30 $.34
Earnings per share - fully diluted $.26 $.26 $.32
The accompanying notes are an integral part of these financial statements.
TRAVEL PORTS OF AMERICA, INC.
Statements of Cash Flows
Year ended April 30,
1997 1996 1995
Operating activities:
Net income $ 1,700,205 $ 1,690,500 $ 1,890,032
Depreciation and
amortization 3,266,330 2,724,604 2,439,513
Provision for deferred
income taxes 592,100 157,100 84,400
(Gain) loss on sale of assets (13,812) (213,881) 27,462
Writedown of assets to fair market value 50,000
Changes in operating assets and liabilities -
Accounts receivable (419) (674,011) (665,143)
Notes receivable (29,792)
Inventories (429,194) 456,994 (1,218,681)
Prepaid and other current
assets (309,480) (392,668) (265,172)
Income taxes receivable (361,344) (127,054)
Accounts payable and accounts
payable - affiliate (212,304) (751,744) 2,227,303
Accrued compensation 253,815 125,557 260,801
Accrued sales and fuel tax 677,984 199,937 (408,364)
Accrued expenses and other
current liabilities 1,751 99,176 (49,060)
Changes in other non-current
assets (127,290) (86,663) (429,606)
Net cash provided by operating
activities 5,038,342 3,207,847 3,913,693
Investing activities:
Expenditures for property,
plant and equipment (8,723,016) (12,021,255) (3,732,736)
Increase in other assets 200,000
Proceeds from sale/disposal of
property, plant and equipment 59,080 294,636 133,870
Net proceeds received from
notes receivable 1,368,864 194,669 82,513
Net cash used in investing
activities (7,295,072) (11,531,950) (3,316,353)
Financing activities:
Net short-term payments (1,752,000)
Principal payments of
long-term debt (8,961,395) (2,409,613) (7,618,962)
Proceeds from long-term
borrowings 12,655,227 4,761,000 10,500,000
Proceeds from convertible
senior subordinated debentures 4,650,000
Exercise of stock options 30,707 45,980 40,020
Net cash provided by
financing activities 3,724,539 2,397,367 5,819,058
Net increase (decrease) in
cash and equivalents 1,467,809 (5,926,736) 6,416,398
Cash and equivalents -
beginning of year 1,667,062 7,593,798 1,177,400
Cash and equivalents -
end of year $ 3,134,871 $ 1,667,062 $ 7,593,798
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year:
Interest paid $ 3,031,427 $ 2,504,368 $ 2,200,881
Income taxes paid, net $ 1,069,200 $ 1,164,000 $ 1,396,100
The accompanying notes are an integral part of these financial statements.
Travel Ports of America, Inc.
Notes to Financial Statements
April 30, 1997
NOTE 1 - THE COMPANY AND ITS ACCOUNTING POLICIES:
The Company is primarily engaged in the operation of travel plazas and has
sixteen service plazas located in the states of New York, Pennsylvania,
New Jersey, Indiana, Maryland, North Carolina and New Hampshire. A
significant portion of the Company's sales and receivables are with
companies in the trucking and related industries.
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles. The preparation of financial
statements in conformity with such principles requires the use of estimates
by management during the reporting period. Actual results could differ from
those estimates.
The Company's significant accounting policies follow.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined on
the first-in, first-out (FIFO) method. The FIFO value of inventory
approximates the current replacement cost.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation is provided on the straight-
line basis over the estimated useful lives of the related assets as follows:
land improvements - 15 years; buildings and improvements - 39 years; and
equipment and fixtures - 3 to 15 years. Leasehold improvements are amortized
over the remaining term of the applicable leases or their estimated useful
lives, whichever is shorter. Expenditures for maintenance and repairs are
charged to expense as incurred. Major improvements are capitalized.
Cost in excess of underlying net asset value of acquired companies
The Company amortizes cost in excess of underlying net asset value of
companies acquired over 40 years. The amount presented on the balance sheet
is net of accumulated amortization of $663,298 and $599,108 at April 30,
1997 and 1996, respectively. Amortization expense for each of the years
ended April 30, 1997, 1996, and 1995 was $64,190. The recoverability of
these assets is periodically evaluated at the operating unit level by an
analysis of operating results and consideration of other significant events
or changes in the business environment.
Earnings per share
Earnings per share is computed by dividing net income by the weighted
average number of common and, when applicable, common equivalent shares
outstanding during the period. Weighted average shares used in the
computation were 5,719,781 in 1997, 5,708,914 in 1996, and 5,635,190 in
1995. Fully diluted earnings per share include the dilutive impact of
common equivalent shares and the convertible debentures. Weighted average
shares used in the computation were 7,378,447 in 1997, 7,361,868 in 1996 and
6,136,234 in 1995. All average shares outstanding and per share amounts
have been restated to give retroactive effect to the 1997 stock dividend
(Note 11).
Cash equivalents
For purposes of this Statement, the Company considers all highly liquid
instruments with an original maturity of three months or less to be cash
equivalents.
Commodity contracts
In the normal course of its business, the Company uses commodity put and
call option contracts to manage its exposure to fluctuations in the prices
of heating oil. Contract positions are designed to ensure that the Company
will pay a defined maximum price for certain quantities of its inventory
purchases. Gains and losses, and the related costs paid or premium
received, for contracts which hedge the purchase prices of commodities are
deferred and subsequently included in income as part of the hedged
transaction. These activities are not significant to the Company's
operations as a whole.
Fair value of financial instruments
Cash and cash equivalents, accounts receivable and inventories are valued at
their carrying amounts, which are reasonable estimates of fair value. The
fair value of long-term debt is estimated using rates currently available to
the Company for debt with similar terms and maturities and is not materially
different from the carrying amount. The fair value of all other financial
instruments approximates cost as stated.
Federal income taxes
Deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax basis of assets and liabilities and
are measured using the enacted tax rates and laws that will be in effect
when those differences are expected to reverse.
Accounting pronouncements
The Financial Accounting Standards Board (FASB) issued SFAS 121,
"Accounting for the Impairment of Long-Lived Assets to Be Disposed Of,"
effective for fiscal years beginning after December 15, 1995. The Statement
requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of the asset may not be recoverable. The adoption
of SFAS 121 in fiscal 1997 did not have a material impact on current year
results and is not expected to significantly impact future operating
results.
The FASB issued SFAS 123, "Accounting for Stock-Based Compensation,"
effective for fiscal years beginning after December 15, 1995, which
establishes accounting and reporting for stock-based employee compensation
plans. This Statement defines a fair value based method of accounting for
an employee stock option or similar equity instrument, but also allows an
entity to continue to measure compensation cost for those plans using the
current method of accounting prescribed by APB Opinion No. 25 (APB 25),
"Accounting for Stock Issued to Employees." The Company has elected not to
change its method of accounting for employee stock options and provides the
pro forma fair value disclosures required by the new pronouncement (Note 12).
The FASB issued SFAS 128, "Earnings Per Share" (EPS), effective for
financial statement issued for periods ending after December 15, 1997.
SFAS 128 requires dual presentation of basic and diluted EPS on the face of
the income statement and requires a reconciliation of the numerator and
denominator of the basic EPS calculation to the numerator and denominator of
the diluted EPS calculation. Basic EPS excludes the effect of common stock
equivalents and is computed by dividing income available to common
shareholders by the weighted average common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could result if
securities or other instruments to issue common stock were exercised or
converted into common stock.
Unaudited pro forma earnings per share computed in accordance with SFAS 128
for basic and diluted earnings per share does not differ from primary and
fully diluted earnings per share, respectively, determined for fiscal years
1997, 1996 and 1995.
Reclassifications
Certain prior years' amounts have been reclassified to conform with current
year presentation.
NOTE 2 - FACILITY ADDITIONS AND DISPOSALS:
On June 15, 1996, the Company opened a new full service travel plaza in
Harborcreek, Pennsylvania. Total construction costs of approximately $8.3
million were financed through a combination of cash generated from
operations and bank financing (Note 7).
On March 1, 1996, the Company entered into a lease agreement for a facility
in Baltimore, Maryland which is operated as a full service travel plaza.
The term of the lease is seven years and is recorded as an operating lease
(Note 6).
On June 15, 1995, the Company sold its Fairplay, South Carolina facility.
The Company received as consideration a cash down payment and a $600,000
note receivable. This sale had no significant impact on operations.
NOTE 3 - INVENTORIES:
Major classifications of inventories are as follows:
1997 1996
At FIFO cost:
Petroleum products $ 1,047,017 $ 925,239
Store merchandise 2,328,955 1,960,961
Parts for repairs and tires 1,803,705 1,884,512
Other 583,346 563,117
$5,763,023 $5,333,829
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT:
Major classifications of property, plant and equipment are as follows:
1997 1996
Land $ 6,386,394 $ 6,225,074
Land improvements 11,949,337 8,795,560
Buildings and improvements 24,031,725 19,218,731
Equipment and fixtures 16,085,837 12,794,052
Leasehold improvements 5,550,491 4,272,663
Construction in progress 679,442 4,870,398
Less - Allowance for
depreciation and
amortization (22,996,972) (20,199,678)
$41,686,254 $35,976,800
Interest costs capitalized aggregated $68,200 and $164,900 in 1997 and 1996,
respectively. No interest costs were capitalized in 1995.
These amounts include property, plant and equipment under a capital lease as
follows:
1997 1996
Building $ 706,031 $ 706,031
Land improvements 243,969 243,969
950,000 950,000
Less - Accumulated
amortization (663,200) (640,010)
$286,800 $ 309,990
The leased assets relate to an agreement with the Livingston County
Industrial Development Agency under which the Agency's bond proceeds were
used to acquire, construct and equip an operating facility in Dansville,
New York. The Company has the option to buy the facility for $1 at the end
of the lease term, February 2000. Lease amortization amounted to $23,190
for each of the years 1997, 1996, and 1995, and is included in depreciation
and amortization expense.
NOTE 5 - OTHER ASSETS:
At April 30, 1997 and 1996, other assets include a leasehold interest in a
full service travel plaza in Greenland, New Hampshire with a carrying value
of $1,818,100 and $1,920,500, respectively. The leasehold interest
represents the amount paid by the Company for the rights to operate a full
service plaza under the terms of a twenty-year lease and is being amortized
over the life of the lease (Note 6).
Deferred financing costs included within other assets are being amortized on
a straight-line basis over the term of the related debt and have a carrying
value of $258,400 and $399,500 at April 30, 1997 and 1996, respectively.
Amortization expense for the leasehold interest and deferred financing for
the years ended 1997, 1996, and 1995 was $233,800, $244,300, and $183,500,
respectively.
NOTE 6 - LEASES:
The Company leases six of its operating facilities and its home office under
various terms from 3 to 20 years. Certain of the operating leases contain
renewal options for periods beyond their original terms at specified rates
of payment and five of the leases include purchase options exercisable at
future dates. The Company has also entered into various leases of equipment
and property used in operations and related office space with various lease
periods and renewal options.
During fiscal 1997, the Company entered into a $3 million lease line of
credit with Fleet Capital Leasing. At April 30, 1997, approximately $1.6
million of the line had been utilized to finance twelve separate leases for
equipment and furniture and fixtures. Each lease qualifies as an operating
lease in accordance with SFAS 13 criteria, and annual payments are included
in the future minimum lease payment schedule below.
At April 30, 1997, future minimum payments required under non-cancelable
leases are as follows:
Operating Capital
1998 $ 2,551,008 $ 59,041
1999 2,216,851 55,001
2000 1,884,689 50,965
2001 1,814,333 11,315
2002 1,738,155
Future 5,264,245
$ 15,469,281 176,322
Less - Amount representing interest 22,738
Present value of net minimum lease
payments $153,584
Rental expense applicable to operating leases, net of sublease income of
$356,900, $333,900, and $361,600, amounted to $2,501,100, $1,352,200, and
$1,180,600, for 1997, 1996, and 1995, respectively.
NOTE 7 - DEBT AND CAPITAL LEASE OBLIGATION:
Debt and capital lease obligation consist of the following:
1997 1996
Lines of credit:
Construction line - prime plus .5% $ 2,925,000(1)
Prime plus .5% 1,836,000(1)
Mortgage loans:
Due 2001, prime plus 1.000% 344,395(2)
Due 2003, prime plus .875% $ 833,345 966,677
Due 2004, prime plus .875% 2,205,153 2,531,766
Due 2005, prime plus .875% 2,841,358 3,208,150
Due 2006, fixed rate of 9.44% 5,800,002(1)
Term loans:
Due 1997, prime plus 1.000% 1,406,685(2)
Due 1999, fixed rate of 9.650% 1,791,678 2,041,674
Due 2002, fixed rate of 10.120% 8,325,718 9,427,469
Due 2002, fixed rate of 8.63% 6,655,228(2)
Obligation under capital lease, 8.5% 153,584 201,085
Other long-term debt, various rates and
maturities 128,125 151,458
28,736,191 25,040,359
Less - Portion due within one year,
including amounts for capital lease
of $47,500 in 1997 and 1996 (3,207,254) (2,756,102)
$25,526,937 $22,284,257
The prime interest rate was 8.50% and 8.25% at April 30, 1994 and 1996,
respectively.
(1) In October 1996, the Company completed the financing of its
Harborcreek, Pennsylvania facility with its primary lender by refinancing
the construction line of credit and the outstanding balance on its regular
line of credit and drawing an additional $1,289,000 for a total of
$6,000,000. Interest on the loan is fixed at 9.44% for ten years with level
principal payments based upon a fifteen-year amortization with a balloon
payment due in September 2006.
(2) In November 1996, the Company entered into an agreement with its
secondary lender to refinance a mortgage loan due 2001 covering two travel
plazas in Pennsylvania, as well as a term loan due in 1997. The agreement
also provided an additional $5,000,000 available for fiscal 1997 capital
expenditures. The loan calls for level principal payments based on a
15-year amortization with a balloon payment due in April 2002. Interest is
fixed at 210 basis points in excess of the five-year United States Treasury
Note rate (8.63%).
In January 1997, the Company entered into an agreement with its primary
lender that increases its existing line of credit to $3,750,000 until August
31, 1997 and provides an additional $3,500,000 capital line of credit. The
line of credit is limited to the lesser of $3,750,000 or the sum of 80% of
the Company's accounts receivable under 90 days old, plus 45% of the
Company's inventory. At April 30, 1997, the Company had utilized $200,000
of its available line of credit as collateral for various letters of
credit. The remaining $3,550,000 is available for draw. The capital line
of credit calls for interest only at prime plus .25% until July 31, 1998.
At that time the line can be repaid or amortized over 42 months with
interest at prime plus .50%. No advances are outstanding against the
capital line of credit at April 30, 1997.
None of the debt agreements outstanding during 1997 require material
compensating balances or commitment fees. Substantially all assets of the
Company have been pledged to secure the outstanding borrowings.
Certain loan agreements require that the Company maintain specified minimums
with regard to net worth, current maturity coverage and the incurrence of
additional indebtedness. In addition, the Company cannot declare dividends
without the consent of its primary lender. The Company is in compliance
with such requirements and restrictions.
Long-term debt requirements excluding capital leases, over the next five
years are as follows: 1998 - $3,159,800; 1999 - $3,288,800; 2000 -
$3,431,400; 2001 - $3,589,100 and 2002 - $3,763,600.
NOTE 8 - CONVERTIBLE SENIOR SUBORDINATED DEBENTURES:
During January 1995, the Company issued $4,650,000 of 8.5% convertible
senior subordinated debentures due January 15, 2005 together with warrants
to purchase 93,000 additional shares of the Company's common stock. Due to
the 1997 stock dividend (Note 11), the warrants available at April 30, 1997
are 98,580. No principal repayments are required until January 2001.
Commencing in January 2001, the Company is required to redeem, on an annual
basis, 20% of the outstanding balance of debentures at par. Interest is
payable on a quarterly basis. The debentures are subordinate to all other
indebtedness and may be converted at the bondholders' option into 1,643,110
shares of the Company's common stock at $2.83 per share. The debentures are
callable at the discretion of the Company after January 15, 1998, at a
redemption price equal to 109% of the principal amount outstanding as of
January 15, 1998, and gradually decreasing to 100% of the principal amount
outstanding at maturity on January 15, 2005.
The warrants are exercisable at any time through their expiration date of
January 2005 at an exercise price of $3.40 per share.
NOTE 9 - INCOME TAXES:
The provision for income taxes consists of the following:
1997 1996 1995
Current provision:
Federal $ 482,500 $ 810,300 $ 806,900
State 128,400 226,600 239,300
610,900 1,036,900 1,046,200
Deferred provision
Federal 467,900 130,900 67,200
State 124,200 26,200 17,200
592,100 157,100 84,400
$ 1,203,000 $ 1,194,000 $ 1,130,600
The reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
1997 1996 1995
Percent Percent Percent
of of of
income income income
before before before
Amount taxes Amount taxes Amount taxes
Statutory federal
rate $ 987,100 34.0% $ 980,700 34.0% $ 1,027,000 34.0%
State income taxes,
net of federal
benefit 166,700 5.7 166,800 5.8 172,200 5.7
Amortization of
goodwill 21,800 .7 21,800 .8 21,800 .7
Meals and
entertainment 24,800 .9 22,000 .8 20,100 .7
Expenditures not
deductible for book (40,500) (1.3)
Excess tax reserve (70,700) (2.4)
Other 2,600 .1 2,700 .1 700 .0
Effective tax
rate $ 1,203,000 41.4% $ 1,194,000 41.4% $ 1,130,600 37.4%
A summary of the deferred income tax assets and liabilities are as follows:
1997 1996
Assets
Bad debt reserve $ 84,600 $ 79,600
Vacation accrual 76,800 69,100
Inventory basis difference 102,000 97,100
Book accruals not currently
deductible for tax 175,100 126,000
Alternative minimum tax 362,000
$ 800,500 $ 371,800
Depreciation $ 1,915,000 $ 684,000
Installment gain 210,200
$ 1,915,000 $ 894,200
NOTE 10 - EMPLOYEE BENEFIT PLAN:
The Company sponsors a defined contribution employee benefit plan covering
substantially all employees who have completed one year of service.
Matching contributions are made at the discretion of the Board of Directors
at the rate of 50 per cent of employee contributions up to 6 per cent of
gross compensation. Total Company matching contributions were $104,500,
$98,100 and $81,600 for 1997, 1996 and 1995, respectively.
NOTE 11 - SHAREHOLDERS' EQUITY:
Changes in shareholders' equity are as follows:
Additional Total
Common paid-in Retained shareholders'
stock capital earnings equity
Balance at April 30, 1994$51,841 $3,727,979 $6,639,710 $10,419,530
Net income 1,890,032 1,890,032
Exercise of options 258 39,762 40,020
Balance at April 30, 1995 52,099 3,767,741 8,529,742 12,349,582
Net income 1,690,500 1,690,500
Exercise of options 292 45,688 45,980
Balance at April 30, 1996 52,391 3,813,429 10,220,242 14,086,062
Net income 1,700,205 1,700,205
Exercise of options 203 30,504 30,707
Stock dividend 3,155 805,481 (808,636)
Balance at April 30, 1997$55,749 $4,649,414 $11,111,811 $15,816,974
On April 28, 1997, the Company declared a 6% stock dividend which was paid
to shareholders of record on April 17, 1997. The dividend was charged to
retained earnings in the amount of $808,636, which was based on the closing
price of $2.56 per share on the date of record. Average shares outstanding
and all per share amounts included in the accompanying financial statements
and notes are based on the increased number of shares giving retroactive
effect to the stock dividend.
NOTE 12 - STOCK OPTION PLANS:
The Company has stock option plans for officers and other key employees.
Provisions of the plans are similar. Options may be granted at prices not
less than the fair market value at the date of grant and expire no later
than ten years after the date of grant. Participants are 100% vested in
their options at date of grant. At April 30, 1997, a total of 491,840
options were available for future grant under the existing plans. A summary
of changes in outstanding stock options is as follows:
Weighted average
Shares under Option exercise price
Outstanding at April 30, 1994 365,962 $1.64
Granted 120,310 $2.06
Exercised (27,439) $1.46
Canceled (10,731) $1.67
Outstanding at April 30, 1995 448,102 $1.76
Granted 106,000 $3.18
Exercised (30,952) $1.49
Canceled (5,289) $1.91
Outstanding at April 30, 1996 517,861 $2.07
Granted 173,233 $2.54
Exercised (21,518) $1.44
Canceled (3,710) $1.73
Outstanding at April 30, 1997 665,866 $2.21
During 1997, the Company adopted the disclosure requirements of SFAS 123,
"Accounting for Stock-Based Compensation." In accordance with SFAS 123, the
Company has elected not to recognize compensation cost related to stock
options with exercise prices equal to the market price at the date of
issuance. If the Company had elected to recognize compensation cost based
on the fair value of the options at grant date as prescribed by SFAS 123,
net income and earnings per share would have been reduced by $319,300 and
$241,700, or $.06 and $.04 per share, for years ended April 30, 1997 and
1996, respectively. The weighted average fair value of options granted
during 1997 and 1996 were $1.84 and $2.28, respectively, determined by the
Black-Scholes option valuation model. The following assumptions were used
in the model: expected volatility of 64.4 per cent, expected dividend yield
of - 0 - per cent, and risk-free interest rates ranging from 6.0 per cent
to 6.8 per cent. The expected lives of the options are 8 years.
Forfeitures are recognized as they occur.
Options outstanding and exercisable
Weighted
Average Weighted
Remaining Average
Range of Number Contractual Exercise
Exercise Outstanding Life Price
$1.42 - $2.00 347,413 6.0 $1.76
$2.18 - $3.18 318,453 8.8 $2.71
NOTE 13 - RELATED PARTY TRANSACTIONS:
The Company has renewed its long-term contract with a petroleum distributor
owned by a shareholder director for the supply of diesel fuel to certain
motor plazas. The original contract expired on December 31, 1995. However,
the Company continued to operate under a verbal agreement with similar terms
throughout 1996. During 1997, a new ten-year contract was negotiated
retroactive to January 1, 1996. Purchases under the contract and other open
market purchases from this company were $32,440,000 in fiscal 1997,
$23,710,000 in fiscal 1996, and $18,833,000 in fiscal 1995. At April 30,
1997 and 1996, $1,179,900 and $717,900, respectively, were owed to this
supplier under contract terms calling for payment within fifteen days.
The Maybrook, New York motor plaza is leased from a realty company owned by
two individuals, one of whom is a shareholder director of the Company. The
lease covers a period through March 2004 at which time the Company has the
option to purchase the facility for $3,500,000. Annual rentals under the
lease are $450,000.
The Company pays a shareholder director, fees and bonuses for consulting,
management and other services rendered to the Company. These fees and
bonuses amounted to approximately $203,600, $203,400, and $204,800 for the
years 1997, 1996, and 1995, respectively.
NOTE 14 - FINANCIAL STATEMENT AND SUPPLEMENTARY DATA:
A capsule summary of the Company's unaudited quarterly net sales,
gross profit, net income and earnings per share for the years ended
April 30, 1997, 1996 and 1995 is presented below.
First Second Third Fourth Total
1997 Quarter Quarter Quarter Quarter Year
Net Sales $46,488,936 $52,698,998 $52,152,573 $55,763,298 $207,103,805
Gross
Profit $11,648,378 $12,071,153 $10,931,519 $11,785,763 $ 46,436,813
Net Income$ 690,401 $ 536,748 $ 49,098 $ 423,958 $ 1,700,205
Net Income Per Share
Primary $ 0.12 $ 0.09 $ 0.01 $ 0.07 $ 0.30
Fully
Diluted $ 0.10 $ 0.08 $ 0.01 $ 0.07 $ 0.26
First Second Third Fourth Total
1996 Quarter Quarter Quarter Quarter Year
Net Sales $38,126,668 $39,619,638 $40,168,832 $47,249,253 $165,164,391
Gross
Profit $ 9,730,038 $ 9,764,317 $ 9,522,040 $10,126,302 $ 39,142,697
Net Income $ 620,267 $ 601,363 $ 267,180 $ 201,690 $ 1,690,500
Net Income Per Share
Primary $ 0.11 $ 0.10 $ 0.05 $ 0.04 $ 0.30
Fully
Diluted $ 0.09 $ 0.09 $ 0.04 $ 0.04 $ 0.26
First Second Third Fourth Total
1995 Quarter Quarter Quarter Quarter Year
Net Sales $38,175,726 $39,075,621 $37,529,063 $38,486,669 $153,267,079
Gross
Profit $ 9,778,327 $10,092,832 $ 9,246,917 $ 9,119,623 $ 38,237,699
Net
Income $ 561,250 $ 714,111 $ 286,917 $ 327,754 $ 1,890,032
Net Income Per Share
Primary $ 0.10 $ 0.13 $ 0.05 $ 0.06 $ 0.34
Fully
Diluted $ 0.10 $ 0.13 $ 0.05 $ 0.05 $ 0.32
Item 9. Disagreements on Accounting and Financial Disclosure
Not Applicable
PART III
Item 10. Directors and Executive Officers of Registrant
The information required by this item is incorporated herein by
reference to the Company's proxy statement, to be issued in connection with
the Annual Meeting of Shareholders of the Company to be held October 28,
1997, under "Election of Directors".
Item 11. Executive Compensation
The information required by this item is incorporated herein by
reference to the Company's proxy statement, to be issued in connection with
the Annual Meeting of Shareholders of the Company to be held October 28,
1997, under "Compensation of the Directors and Executive Officers".
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated herein by
reference to the Company's proxy statement, to be issued in connection with
the Annual Meeting of Shareholders of the Company to be held October 28,
1997, under "Principal Holders of Voting Securities" and "Election of
Directors".
Item 13. Certain Relationships and Related Transactions
The information required by this item is incorporated herein by
reference to the Company's proxy statement, to be issued in connection with
the Annual Meeting of Shareholders of the Company to be held October 28,
1997, under "Certain Relationships and Related Transactions" or "Compensation
of Directors and Executive Officers" and "Election of Officers".
PART IV
Item 14. Exhibits, Financial Statement Schedules on Form 10-K
Item 14(a)(1), 14(a)(2) and 14(d):
The following financial statement and financial statement schedules
are filed as a part of Item 8 of this Report:
Report of Independent Accountants
Balance Sheets for the years ended April 30, 1997 and 1996
Statements of Income for the years ended April 30, 1997, 1996 and 1995
Statements of Cash Flows for the years ended April 30, 1997, 1996 and
1995
Notes to Financial Statements
Selected Quarterly Financial Information (Unaudited)
All other schedules are not submitted because they are not applicable
or not required under Regulation S-X or because the required information is
included in the financial statements or notes thereto.
Item 14(b):
Not Applicable
Item 14(a)(3) and 14(c):
See Index to Exhibits
INDEX TO EXHIBITS
(3) Articles of Incorporation and By-laws
Exhibit 3-a and exhibit 3-b to the Company's Registration
Statement on Form S-18, File No. 33-7870-NY are incorporated herein by
reference with respect to the Restated Certificate of Incorporation and
By-laws of the Company.
3-c Certificate of Amendment of Certificate of
Incorporation changing the name of the Corporation, is incorporated herein
by reference to Exhibit 3-c of the Company's report on Form 10-K dated July
27, 1993.
(4) Instruments defining the rights of security holders, including
indentures
The Exhibits referenced under (3) of this Index to Exhibits are
incorporated herein by reference.
Exhibit 4-a, Form of Common Stock Certificate, to the Company's
Registration Statement on Form S-18, File No. 33-7870-NY is incorporated
herein by reference with respect to instruments defining the rights of
security holders.
Exhibit 4-c, Form of Indenture dated as of January 24, 1995, between
Travel Ports of America, Inc. and American Stock Transfer and Trust Company,
as Trustee, with respect to up to $5,000,000 principal amount of 8.5%
Convertible Senior Subordinated Debentures due January 15, 2005 is
incorporated by reference to Exhibit 4-c to the Company's Current Report on
Form 8-K dated February 15, 1995.
Exhibit 4-d, Form of Warrant to purchase Common Stock is
incorporated by reference to Exhibit 4-d to the Company's Current Report on
Form 8-K dated February 15, 1995.
(9) Voting trust agreements
None
(10) Material contracts
10.1 The following material contracts are incorporated herein by
reference to the Company's Registration Statement on Form S-18, File
No. 33-7870-NY:
10-a Employee Incentive Stock Option Plan
10-b Lease dated as of March 1, 1980, between the Company and Livingston
County Industrial Development Agency for the Dansville, New York facility.
10-c Sublease dated as of March 30, 1984, between the Company and
Maybrook Realty for the Maybrook, New York facility.
10-d Sublease dated March 14, 1984, between the Company and Ryder
Truckstops, Inc. ("Ryder") for part of the Mahwah, New Jersey facility.
10-e Sublease dated March 14, 1984, between the Company and Ryder for
part of the Mahwah, New Jersey facility.
10-f Lease dated February 1, 1973, between Truckstop Corporation of
America, Inc. ("TCA") and E. Elwood Moore and Francis Moore, together with
Assignments to the Company, dated March 14, 1984 for part of the Mahwah,
New Jersey facility.
10-u Unbranded Distillate Sales Agreement dated January 2, 1986, between
the Company and W.W. Griffith Oil Co., Inc.
10-v Purchase and Sales Contract for the Belmont, New York facility dated
February 7, 1986, between the Company and W.W. Griffith Oil Co., Inc.
10.2 Lease, dated December 1, 1988, amended January 10, 1989, between the
Company and Christ T. Panos is incorporated herein by reference to Exhibit 2
(b) and (c) to the Company's Current Report on Form 8-K dated January 20,
1989, as amended by Form 8-K dated March 21, 1989.
10.3 Real estate mortgage dated January 5, 1989, executed and delivered
by the Company as security for the Mortgage payable to Fleet Bank N.A. is
incorporated herein by reference to Exhibits 2 (n), 2 (p) and 2 (q) to the
Company's Amended Current Report on Form 8-K dated March 21, 1989.
10.4 Mortgage Agreement dated December 1989 executed and delivered by the
Company as security for the Mortgage payable to Fleet Bank N.A. relating to
the construction of the Greencastle, Pennsylvania facility is incorporated
herein by reference to Exhibit 10 (e) of the Company's report on Form 10-K
dated August 10, 1990.
10.5 Credit Agreement dated June 1988 executed and delivered by the Company
as security for the Mortgage payable to Fleet Bank N.A. is incorporated
herein by reference to Exhibit 10 (f) of the Company's report on Form 10-K
dated August 10, 1990.
10.6 Term Loan Note dated January 28, 1991, executed and delivered by the
Company as security for the Mortgage payable to Fleet Bank N.A. is
incorporated herein by reference to Exhibit 4 (c) of the Company's report on
Form 10-Q dated March 14, 1991.
10.7 1991 Employee Incentive Stock Option Plan is incorporated herein by
reference to Appendix "A" of the Proxy Statement issued for the October 29,
1991, Annual Meeting of Stockholders.
10.9 1993 Employee Incentive Stock Option Plan is incorporated herein by
reference to Appendix "A" of the Proxy Statement issued for the October 26,
1993, Annual Meeting of Stockholders.
10.10 Lease dated May 31, 1991 and amended June 17, 1992, between the
Company and Townline Associates is incorporated herein by reference to
Exhibit 10.10, page 50 of the Company's report on Form 10-K dated July 27,
1994.
10.11 Lease dated November 20, 1987, amended April 21, 1993, and April 29,
1994, between the Company and Siegel Limited Partnership is incorporated
herein by reference to Exhibit 10.11, page 91 of the Company's report on
Form 10-K dated July 27, 1994.
10.12 Term Loan Note dated June 30, 1994, executed and delivered by the
Company as security for the Mortgage payable to Fleet Bank of New York is
incorporated herein by reference to Exhibit 10.12, page 120 of the Company's
report on Form 10-K dated July 27, 1993.
10.13 Restated and Amended Credit Agreement, Revolving Line Note and Term
Loan Note, all dated September 29, 1994, executed and delivered by the
Company to Fleet Bank of New York is incorporated herein by reference to
Exhibit 10.13, page 14 of the Company's report on Form 10-Q dated November
28, 1994.
10.14 1995 Employee Incentive Stock Option Plan is incorporated herein by
reference to Appendix "A" of the Proxy Statement issued for the October 24,
1995, Annual Meeting of Stockholders.
10.15 Restated and Amended Credit Agreement, Revolving Line Note and Term
Loan Note, all dated December 21, 1995, executed and delivered by the
Company to Fleet Bank of New York is incorporated herein by reference to
Exhibit 10.14, page 16 of the Company's report on Form 10-Q dated March 8,
1996.
10.16 Lease dated February 16, 1996 between the Company and Baltimore Port
Truck Plaza Limited Partnership, Truck Ex. Inc. and Travel Plaza I, Inc. is
incorporated herein by reference to Exhibits beginning on page 69 of the
Company's report on Form 10-Q dated March 8, 1996.
10.17 Loan Agreement dated November 6, 1996, executed and delivered to PNC
Bank is incorporated herein by reference to Exhibit 10.17, page 17 of the
Company's report on Form 10-Q dated December 13, 1996.
10.18 Restated and Amended Credit Agreement, Revolving Line Note and Term
Loan Note, all dated January 31, 1997, executed and delivered by the Company
to Fleet Bank of New York is incorporated herein by reference to Exhibit
10.18, page 17 of the Company's report on Form 10-Q dated March 11, 1997.
10.19 Distillate Sales Agreement dated January 1, 1996, between the
Company and Griffith Oil Co., Inc. is set forth on page 46 of this report.
(11) Statement re computation of per share earnings
Computation of Per Share Earnings is set forth in Exhibit (11) on
page 42 of this report.
(12) Statement re computation of ratios
Not applicable
(13) Annual report to security holders
Not applicable
(16) Letter re change in certifying accountant
Not applicable
(18) Letter re change in accounting principles
Not applicable
(19) Previously unfiled documents
None
(21) Subsidiaries of Registrant
Exhibit (21) on page 43 of this report.
(22) Published report regarding matters submitted to vote of security
holders
None
(23) Consents of experts and counsel
Exhibit (23) on page 43 of this report.
(24) Power of Attorney
Not applicable
(27) Financial Data Schedule
Exhibit (27) on page 45 of this report.
(28) Information from reports furnished to state insurance regulatory
agencies
None
(99) Additional exhibits
None
Exhibit 11
Computation of Primary Per Share Earnings
Total Options Common
Below Market Average Average Equivalent
Quarter Ended Price Option Price Market Price Shares
7/31/96 429,126 $2.00 $2.97 173,119
10/31/96 525,416 $2.00 $2.98 172,763
1/31/97 520,116 $2.13 $2.67 105,909
4/30/97 559,866 $2.03 $2.63 127,474
Total of Four Quarters 579,265
Average common stock equivalents outstanding during year
ended 4/30/97 144,816
Average number of shares outstanding during year ended 4/30/97 5,574,965
Total weighted average shares outstanding 5,719,781
Net Income for year ended 4/30/97 $1,700,205
Net Income per common and common equivalent shares $.30
Computation of Fully Diluted Per Share Earnings
Total Options Common
Below Market Average Ending Equivalent
Quarter Ended Price Option Price Market Price Shares
7/31/96 635,126 $2.20 $3.28 210,127
10/31/96 525,416 $2.00 $2.98 172,763
1/31/97 520,116 $2.01 $2.69 131,949
4/30/97 559,866 $2.03 $2.63 126,650
Total of Four Quarters 641,489
Average common stock equivalents outstanding during year ended
4/30/97 160,372
Common stock equivalents due to assumed conversion of
convertible debentures 1,643,110
Average number of shares outstanding during year ended 4/30/97 5,574,965
Total weighted average shares outstanding 7,378,447
Net Income for year ended 4/30/96 $1,700,205
Interest on 8.5% convertible debentures, after tax 237,150
$1,937,355
Net Income per common and common equivalent shares $.26
Exhibit 21
Subsidiaries of the Registrant for the year ended April 30, 1997
The Company has no parent. As of April 30, 1992, all subsidiaries
have filed for certificates of dissolution and all activity has been
recorded by the Company for the year ended April 30, 1997.
Exhibit 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Prospectus constituting part of the Registration Statement on Form S-3
(No. 33-7870-NY) of Travel Ports of America, Inc. of our report dated
June 20, 1997, appearing on page 21 of this Form 10-K.
PRICE WATERHOUSE LLP
Rochester, New York
July 28, 1997
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Travel Ports of America, Inc., has duly
caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
TRAVEL PORTS OF AMERICA, INC.
By: /s/ John M. Holahan
July 28, 1997 John M. Holahan, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons in the capacities and
on the date indicated below.
Signature Title Date
/s/ E. Philip Saunders Chairman of the Board and
E. Philip Saunders Chief Executive Officer July 28, 1997
/s/ John M. Holahan President and Chief July 28, 1997
John M. Holahan Operating Officer
/s/ William Burslem III Vice President, Secretary and
William Burslem III and Chief Financial Officer July 28, 1997
/s/ William A. DeNight Director July 28, 1997
William A. DeNight
/s/ W. Patrick Marchbanks Director July 28, 1997
W. Patrick Marchbanks
/s/ Dante Gullace Director July 28, 1997
Dante Gullace
/s/ John F. Kendall Director July 28, 1997
John F. Kendall
DISTILLATE SALES AGREEMENT
In consideration of mutual promises and benefits arising and
expected to arise hereunder, Seller and Buyer agree with the intent to bound
legally to the following terms and conditions.
1. Definitions: As used herein.
1.1 "Seller" means Griffith Oil Co., Inc., 760 Brooks
Avenue, Rochester, New York 14619
1.2 "Buyer" means Travel Ports of America, Inc., 3495
Winton Place, Bldg. C, Rochester, new York 14623
1.3 "Product" or "Products" mean the grade of Distillate
Oil as specified in Attachment A.
1.4 "Quantity" or "Quantities" mean the amount or volume
stated in US gallons of Product to be taken during each month of this
Agreement as specified in Attachment A.
1.5 "Terminal" or "Terminals" mean the delivery points
specified in Attachment A.
1.6 "Term of Agreement" means a period of ten (10)
years, commencing January 1, 1996 and ending December 31, 2005.
2. Sale/Purchase: Seller shall sell and Buyer shall purchase
and take the Products in the Quantities at the Terminals and at the prices
specified herein.
3. Product & Quantity.
3.1 Notwithstanding the foregoing, if any Product would be
required to be mandatorily allocated by Seller, pursuant to any federal or
state law, statute or regulation of any governmental agency, now or
hereafter in effect, Buyer shall be entitled to purchase and receive the
amount of such Product, if any, which Seller would be required to sell and
supply to Buyer under those laws, statues, or regulations.
4. Quantity.
4.1 Products shall conform with the Seller's
specifications for those Products sold to this class of customer in effect
for the type and method of delivery at the time and place of delivery.
4.2 At Buyer's sole expense, Buyer may have its
representatives witness the loading of the Product into its delivery means
and may take samples of the Products at the time of delivery.
4.3 If Seller experiences a reduction or unavailability of
any grade or type of Products for any reason not limited to causes beyond
Seller's control, Seller may, but is not obliged to, designate a temporary
alternate source of supply and/or offer Buyer temporary substitute Products.
Seller also may reduce the quantity to be delivered to Buyer to the extent
necessary for Seller to allocate equitably its available Products to
Seller's customers (including Buyer) and to locations owned by Seller,
directly or indirectly affected by such reduction or unavailability. No
notice is necessary to invoke this Paragraph. Notwithstanding the foregoing,
if such reduction or unavailability of Products continues for thirty (30)
consecutive days, Buyer shall have the right to terminate this Agreement at
any time thereafter (and prior to prior to restoration of Product supply by
Seller) by written notice to Seller.
5. Price.
5.1 The price or prices of the Products shall be as
specified in Attachment A.
6. Place of Delivery.
6.1 All deliveries shall be made to Buyer at the
Terminals.
6.2 Unless otherwise agreed, transportation shall be
arranged by Seller to such Terminals, and no change in the destination of any
shipment shall be made without the consent of Seller.
6.3 For any delivery means arranged by Buyer, such
delivery means to receive the Products, shall arrive at the Terminal clean
and fit for the transportation of the Product, shall arrive when scheduled,
and promptly shall be removed from the Terminal upon the completion of
receipt.
7. Terms of Payment.
7.1 Buyer shall pay to Seller cash upon delivery of the
Products or shall comply with any credit arrangements which Buyer may have
made with Seller.
7.2 Seller's invoices, delivery tickets and other
pertinent documents as to the supply of such Products shall be presumptive
evidence of the quantities, deliveries, and prices of said Product.
7.3 The conditions of Buyer's account and Buyer's
financial responsibilities to Seller shall be and remain in substantial
compliance with any written terms of payment established for Buyer at all
times, otherwise Seller may revise said terms or may suspend deliveries of
the Product to Buyer, without any liability to Buyer and without releasing
Buyer from its obligations hereunder.
7.4 The right to change terms of payments and to suspend
sales of the Product to Buyer shall be in addition to, and not in
substitution for other rights and remedies available to Seller by operation
of law and other provisions of this Agreement.
7.5 Buyer grants Seller the right to set off and to
apply any money or accounts payable owned by Seller to Buyer or any
collateral of every description held by Seller to secure any indebtedness or
obligation owed by Buyer to Seller against any unpaid money or accounts
receivable owed to Seller by Buyer.
8. Warranties and Limitations of Liability.
8.1 Seller warrants that the Products sold to Buyer
under this Agreement shall meet the Seller's specifications for the Product
at the time and place of delivery. This warranty is in lieu of all other
warranties, expressed or implied, including, but not limited to, fitness for
a particular purpose and merchantability.
8.2 The Correction of the Nonconformity. The refund of
the purchase price or the replacement of the Product at Seller's option,
shall constitute fulfillment of all liabilities of Seller whether the
liabilities are based upon contract, negligence or otherwise. Seller shall
not be liable for special consequential or incidental damages.
8.3 No claims or allowances shall be made or allowed on
any delivery after the delivery of the Product.
9. Impracticability of Performance. In the event of any
curtailment, shortage, or cessation in Seller's existing or contemplated
availability of such Products to be sold hereunder, or in the raw materials
used to manufacture such Products, irrespective of the cause or
foreseeability of such curtailment, shortage, or cessation and in event of
Seller's inability to comply with any or all of its obligations to Buyer and
other to whom it would be bound under then existing contracts or with whom
it would have historical relationships, Seller, at its discretion, but in a
fair and commercially reasonable manner may withhold, suspend, or reduce
sales and deliveries or may relocate sales and deliveries to Buyer and
others and shall not be required to make good any shortages resulting
therefrom. Seller shall not be obligated to purchase products in the open or
spot market to supplement Seller's existing or contemplated availability of
such Products in order to invoke this Section.
10. Force Majeure
10.1 Seller and Buyer each shall exert diligence in
performing under this Agreement but neither shall be liable in any manner
whatsoever when in the following examples of "force majeure" situations its
performance would be delayed or prevented by fire, explosion, storm, flood,
electrical blackout, extreme heat or cold, war, rebellion, insurrection,
riot, strike, breakage or accident to machinery, differences with workmen,
failure of carriers to transport or to furnish facilities for transportation
or perils of navigation, or such delay or failure in performance when its
supplies or facilities of production, manufacture, transportation or
distribution, which otherwise would be available, would be impaired through
compliance with the order of any government or acting authority, or when
such delay or failure would be due to any cause whatsoever reasonably beyond
its control, whether similar or dissimilar from the causes herein
enumerated.
10.2 Seller shall not be liable hereunder if a force
majeure situation would exist, which makes unavailable part, but not all of
its production, manufacturing, transportation or distribution facilities,
and Seller, in its commercially reasonable judgment and in order to meet
more essential operational needs, applies to its available facilities to
produce, manufacture, transport or distribute products other than distillates.
10.3 In the event of a force majeure situation,
deliveries or receipts which would have been suspended shall not be required
to be made up on the resumption of performance, but the total quantity
required under this Agreement shall be reduced by the amount not delivered
or not received during such suspension, computed on the basis of the average
monthly quantity hereunder. Such suspensions shall be made proportionally
among all of the Seller's customers of the Product.
10.4 The party affected by force majeure shall give
notice to the other party as promptly as practicable of the nature and
probable duration of such force majeure.
11. Risk of Loss. At the Terminal, title and risk of loss,
damage, destruction, or deterioration to any Products shall pass to Buyer at
the outlet flange of Seller's delivery equipment.
12. Indemnification. Buyer shall protect, indemnify, save
harmless, and, at Seller's option, defend Seller and its parent subsidiaries,
affiliates and employees from any and all claims, demands, expenses
(including reasonable attorney's fees), costs, losses, damages, fines, and
causes of action which may be made sustained, incurred or initiated by any
person or persons, including Buyer and its employees and agents and any
governmental entities, arising from, caused by, or resulting in any way from
the resale, use, handling, or storage of the Products by Buyer or the
operation and conduct of Buyer's business, except to the extent these
claims, demands, expenses, costs, losses, damages, fines, and causes of
action arise from, are caused by, or result from the sole negligence of
Seller and its subsidiaries and employees.
13. Fees; Taxes. Buyer shall be liable for and shall pay all
license and permit fees, taxes, and charges whatsoever in accordance will
all federal, state, or municipal laws, ordinances or regulations now or
hereafter in effect incident to purchase, resale, use, or storage of Product
purchased by Buyer and to the conduct and operation of Buyer's business. In
the event any such license and permit fees, taxes, and charges shall be
levied or shall be charged by governmental authorities against Seller, Buyer
shall promptly reimburse Seller therefor.
14. Trade Names and Trademarks. For the purpose of inducing
the resale of the Products, Buyer, directly or indirectly, neither shall use
or employ trade names, trademarks or other symbols or identifications owned
by or associated with Seller concerning the Product nor shall represent that
the Product originated from Seller.
15. Compliance with Laws. Buyer shall observe all applicable laws,
regulations and orders and shall indemnify Seller for any fine, penalty or
liabilities, and for any cost related thereto, including, without
limitation, court costs and attorneys' fees arising out of any failure by
Buyer to observe any law, regulation or order.
16. Storage Tanks, Pipes and Dispensers.
a. Buyer acknowledges that spills, overfills, release or escape
of any Products from storage tanks, pipes or dispensers can constitute a
serious environmental and safety hazard. Buyer shall observe all laws and
regulations pertaining to handling, storage and distribution of Products and
to the release or escape thereof. Without limiting the generality of the
preceding sentence, Buyer shall observe the laws and regulations pertaining
to inventory control, leak testing and detection, to construction,
installation, operation, maintenance, repair, replacement and closure of
tanks, pipes and dispensers, to actions correcting and remediating the
escape of Products, and to financial responsibility.
b. Except to the extent caused by transportation and delivery
of Products by Seller to Buyer, Buyer shall defend, indemnify and save
Seller harmless from and against any and all taxes, fees fines, penalties,
liabilities, claims, judgments, costs and expenses (including, without
limitation, court costs and attorney's fee(s) for any escape of Products
purchased by Buyer, unless such escapes is proximately caused in part by the
negligence of Seller.
c. Seller shall observe all laws and regulations pertaining to
transportation and delivery of Products to Buyer.
17. Default; Termination; Remedies.
17.1 If, during the term of the Agreement or any extensions
thereof, one or more of the following events would occur, Seller or Buyer
shall be deemed for all purposes to be in default hereof, and the other
party thereupon shall have good cause to cancel this Agreement and shall be
afforded the remedies provided under the Uniform Commercial Code:
A. Buyer shall fail to promptly pay Seller in accordance with
the specified terms of payment for such Product purchased by Buyer;
B. Seller or Buyer (a) shall become insolvent (which term is
defined for purposes hereof as failure to meet its obligations as the same
fall due); (b) shall file an answer admitting any material allegations of
any insolvency petition filed pursuant to any federal or state insolvency
act; (c) shall make an assignment for the benefit of creditors; (d) shall
apply for, consent to, or suffer the appointment of a receiver or trustee
for any part of its property or assets; or (e) shall fail to satisfy or to
appeal from any material judgment or attachment within thirty (30) days from
the date of entry;
C. Seller or Buyer shall fail to provide adequate assurance of
performance of this Agreement within thirty (30) days after receipt of the
written notification of Seller's or Buyer's reasonable grounds for
insecurity of such performance.
17.2 If, during the term of the Agreement or any extensions
thereof, one or more of the following events would occur and if the
defaulting party would not have cured the default within ten (10) days from
the date of notice of default from the other party, Seller or Buyer shall be
deemed for all purposes to be in default hereof, and the other party
thereupon shall have good cause to cancel this Agreement and shall be
afforded the remedies provided under the Uniform Commercial Code:
A. (If applicable) Seller shall fail to supply the Quantity or
Buyer shall fail to purchase and take the Quantity;
B. Seller or Buyer shall violate or otherwise shall fail to
comply substantially with any requirement imposed upon or promise made by it
in this Agreement, irrespective of the fact that such failure to comply or
violation is not herein above specified as an event of default.
17.3 Notwithstanding anything to the contrary herein, Travel Ports
may cancel this agreement upon not less than one (1) year's prior written
notice in the event all of the assets or a majority of Buyer's stock is sold
to a third party in a single transaction.
18. Notices.
18.1 All notices shall be considered as properly given if in
writing and sent by registered or certified United States Mail or filed with
the telegraph company, and in either instance, addressed to the party for
whom it was intended at the following respective address:
To Seller: Griffith Oil Co., Inc.
760 Brooks Avenue
Rochester New York 14619
To Buyer: Travel Ports of America, Inc.
3495 Winton Place, Bldg. C
Rochester, New York 14623
The date of service of the notice, when served by the mail, shall be the
date which said notice is deposited in the United States Mail, properly
addressed with postage prepaid and duly registered or certified with return
receipt requested or when served by telegraph shall be the date on which
said notice is filed with the telegraph company.
18.2 At any time on similar notice to the other, either party may
change the address to which notice may be sent.
19. Assignment. This Agreement is not assignable or transferable
by either party except to the successor-in-interest to all or nearly all of
the assets of that party.
20. Miscellaneous Provisions.
20.1 This Agreement is deemed a New York contract and shall be
construed, governed by, and administered in accordance with the laws of the
State of New York.
20.2 All provisions, covenants, and agreements on this Agreement
contained by or on the behalf of any of the parties hereto shall bind and
shall inure to the benefit of the respective successors-in-interest and
assigns of the parties hereto whether so expressed or not.
20.3 This Agreement represents the entire understanding of the
parties, and there are not any other terms, conditions, representations, or
warranties, expressed or implied, written or oral, except as set forth
herein. No amendments, modifications, or additions hereto will be binding
unless they would be executed in writing by all of the parties.
20.4 If any portion of this Agreement should be adjudged illegal or
unenforceable, the remainder of this agreement shall continue to be
enforceable if commercially reasonable.
20.5 The captions used in this Agreement are for references
purposes only and shall not effect the interpretation or meaning of this
Agreement.
20.6 This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
20.7 If either party shall waiver any power, right or remedy
arising hereunder or under any applicable law, such waiver shall not be
deemed to be a waiver upon the later occurrence or reoccurrence of any said
events. No reasonable delay by either party in the exercise of any power,
right, or remedy shall constitute under any circumstances, a waiver of that
party's power, rights, or remedies.
20.8 This Agreement supersedes and replaces all prior contracts,
arrangements and understanding between the parties concerning the Products.
20.9 This is a sales contract. Neither Buyer or Buyer's employees
are joint venturers, partners, agents or employees of Seller. neither Seller
or Buyer is authorized to represent, obligate or bind the other. Nothing in
this contract shall be construed as giving Seller any right to exercise any
control over Buyer's operations or over the manner and methods by which
Buyer conducts its operations.
20.10 In respect of any dispute concerning this contract,
performance hereunder or breach hereof, the parties hereto irrevocably
submit to the non-exclusive jurisdiction of the District Court of Monroe
County, New York.
Executed by their duly authorized representatives and witnessed on
this day of August, 1996.
TRAVEL PORTS OF AMERICA, INC.,
BUYER
John M. Holahan, President
GRIFFITH OIL CO., INC., SELLER.
Boyd E. Foster, President
ATTACHMENT A
I. PRODUCTS. Low sulphur diesel fuel for highway use.
II. QUANTITIES: Buyer shall purchase all of its requirements for
its truckstop and travel plaza facilities at (1) Dansville, New York, (2)
Binghamton, New York, and (3) Belmont, New York.
III. PRICES:
Destination Price
Dansville, New York Cost (low available rack at Big Flats,
WITCO, Warren, Pa., Binghamton or
Rochester racks), less cash discount
to Seller, if any, plus $.01/gallon
and applicable freight from source
of product.
Belmont, New York Same as above.
Binghamton, New York Same as above.
Freight shall be charged at the rate of $1.50/mile or minimum rate of
$.012/gallon, based on 7,800 gallon minimum loads, to be increased annually
according to CPI Index, not to exceed four percent (4%) annually. Rate in
Pennsylvania will be based upon 7,200 gallon loads.
Index General Purpose Additive (or equivalent substitute) to be provided
upon request at cost.
IV. PAYMENT TERMS: Net 10 days. A service charge of 1% shall be
assessed on payments not received on or before 12 days from date of invoice
and every thirty days thereafter. Travel Ports to cooperate in setting up
EFT.
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